Leaving New York City

[Guest cherzeca]

Ken Moelis Gives His Bankers Blessing to Move Wherever They Want

 

https://www.bloomberg.com/news/articles/2020-12-11/moelis-gives-his-bankers-blessing-to-work-wherever-they-want?srnd=premium

 

"While New York will remain his firm’s headquarters, a place to collaborate, to build camaraderie and to nurture new recruits, Moelis will consider opening or expanding offices as staff relocate. He expects they’ll move to cities where tax rates are lower, the climate is warmer and government is friendly to business."

 

I am seeing more of this anecdotally at the firms that my adult kids and their friends are working at. first, most NYC "central offices" are still closed, through 9/21. then there is a discussion about moving to a distributed hub organization, where there really won't be a central office, but various offices where the people are. one kid's firm (one central office now in NYC) is doing an inventory of where people are and where they want to go to when the pandemic ends, and that place turns out to be not NYC. 

[Spekulatius]

I guess the fix for NYC is lower prices and lower rents. Families will move out and younger folks will backfill. Of course the solution with lower rents isn’t really great for landlords, but it could end up making NYC a more interesting and vibrant place. There is always opportunity after some wreckage.

[fareastwarriors]

 

Covid Is Accelerating the Exodus From New York and California to Cheaper States

 

While taxes spur relocations by the rich, lower costs, bigger living spaces and better quality of life are driving other Americans during the pandemic.

 

https://www.bloomberg.com/news/articles/2020-12-14/best-us-cities-to-move-to-during-covid-where-and-why-americans-are-relocating

[fareastwarriors]

Deutsche Bank could move half its NY staff to smaller hubs

 

 

https://therealdeal.com/2020/12/14/deutsche-bank-could-move-half-its-ny-staff-to-smaller-hubs/

[fareastwarriors]

Investment banking from home thrived under COVID-19, but some fear losing their touch

 

 

https://www.reuters.com/article/businessNews/idUSKBN293119

[Guest cherzeca]

https://nypost.com/2020/12/30/nyc-bicyclists-attack-bmw-in-broad-daylight-wild-video-shows/

[BG2008]

https://nypost.com/2020/12/30/nyc-bicyclists-attack-bmw-in-broad-daylight-wild-video-shows/

 

This kind of shit really scares me despite having a large concentration of my wealth in both private and public NYC real estate plays.  The truth is that middle/upper class people may want no bail, equality, diversity etc.  The reality is that if this becomes an expected outcome on a daily basis, you can kiss rent collection and rent growth goodbye in NYC.  It's not like this is a marginal area like the Bronx.  This is motherfucking 5th Ave and 21st Street.  The best investment in the next 10 years may be gated communities in Florida as lacking in character as they are.  When you examine the pyramids of needs, safety is at the bottom.  I'm going to keep monitoring this.  But I may bail out of my NYC position if this becomes a thing.  At times like this, I really do miss Bloomberg as mayor.  DeBlasio has been terrible.  I am worried that there is not mayor candidates who is going to reverse this trend.  There was a great reddit thread once that talks about "perception of risk by a group of teenagers".  I think our society cuddle teenagers too much.  The reality is that a group of 14-20 years risk perception has not been fully developed.  They don't fully understand consequences at that point.  Our society is currently giving a blank check for youngsters to destroy and hurt people and property without the threat of jail time.  Why the political rant all a sudden?  Well, it affects the investment thesis of owning RE in Florida.  Redneck Riviera looks a lot more attractive at the moment.  Should've bought some Joes. 

[cubsfan]

^ There is nothing like good old Law and Order to help you sleep.  Seems to be lost on our big city mayors and governors. At least NYC is in better shape than Chicago - and the bailout continues here. After many years of no RE appreciation in the suburbs (and large falling prices), homes in the suburbs

are now selling like hotcakes as people flee downtown Chicago. The riots, burning, looting and gangbangers finally found their way to the Gold Coast,

Magnificent Mile, and Near North areas - and citizens are not safe anymore.

[Guest cherzeca]

https://nypost.com/2020/12/30/nyc-bicyclists-attack-bmw-in-broad-daylight-wild-video-shows/

 

This kind of shit really scares me despite having a large concentration of my wealth in both private and public NYC real estate plays.  The truth is that middle/upper class people may want no bail, equality, diversity etc.  The reality is that if this becomes an expected outcome on a daily basis, you can kiss rent collection and rent growth goodbye in NYC.  It's not like this is a marginal area like the Bronx.  This is motherfucking 5th Ave and 21st Street.  The best investment in the next 10 years may be gated communities in Florida as lacking in character as they are.  When you examine the pyramids of needs, safety is at the bottom.  I'm going to keep monitoring this.  But I may bail out of my NYC position if this becomes a thing.  At times like this, I really do miss Bloomberg as mayor.  DeBlasio has been terrible.  I am worried that there is not mayor candidates who is going to reverse this trend.  There was a great reddit thread once that talks about "perception of risk by a group of teenagers".  I think our society cuddle teenagers too much.  The reality is that a group of 14-20 years risk perception has not been fully developed.  They don't fully understand consequences at that point.  Our society is currently giving a blank check for youngsters to destroy and hurt people and property without the threat of jail time.  Why the political rant all a sudden?  Well, it affects the investment thesis of owning RE in Florida.  Redneck Riviera looks a lot more attractive at the moment.  Should've bought some Joes.

 

you are likely not old enough to remember the Dinkins administration...squeejee men who would spit on your car if you didnt pay them to clean your perfectly clean front windshield.  take it from me, things will get worse before they get better in NYC.  I dont see any sanity on the near horizon

[Gregmal]

NY will get worse, but I dont ever see it being less desirable than Chicago. I've shifted my exposure from the office stuff to residential/retail. Blue collar jobs will still be there, as will tourists.

[BG2008]

https://nypost.com/2020/12/30/nyc-bicyclists-attack-bmw-in-broad-daylight-wild-video-shows/

 

This kind of shit really scares me despite having a large concentration of my wealth in both private and public NYC real estate plays.  The truth is that middle/upper class people may want no bail, equality, diversity etc.  The reality is that if this becomes an expected outcome on a daily basis, you can kiss rent collection and rent growth goodbye in NYC.  It's not like this is a marginal area like the Bronx.  This is motherfucking 5th Ave and 21st Street.  The best investment in the next 10 years may be gated communities in Florida as lacking in character as they are.  When you examine the pyramids of needs, safety is at the bottom.  I'm going to keep monitoring this.  But I may bail out of my NYC position if this becomes a thing.  At times like this, I really do miss Bloomberg as mayor.  DeBlasio has been terrible.  I am worried that there is not mayor candidates who is going to reverse this trend.  There was a great reddit thread once that talks about "perception of risk by a group of teenagers".  I think our society cuddle teenagers too much.  The reality is that a group of 14-20 years risk perception has not been fully developed.  They don't fully understand consequences at that point.  Our society is currently giving a blank check for youngsters to destroy and hurt people and property without the threat of jail time.  Why the political rant all a sudden?  Well, it affects the investment thesis of owning RE in Florida.  Redneck Riviera looks a lot more attractive at the moment.  Should've bought some Joes.

 

you are likely not old enough to remember the Dinkins administration...squeejee men who would spit on your car if you didnt pay them to clean your perfectly clean front windshield.  take it from me, things will get worse before they get better in NYC.  I dont see any sanity on the near horizon

 

I am old enough to remember squeezy man, mob controlled everything, and not wanting to be in now very nice parts of Brooklyn.  I also remember the gangs of Chinatown.  I remember a time when both liberals and conservatives hail Rudy as cleaning up the city.  It's bizarre for me to see how much people hate Rudy today.  I am very liberal when it comes to who gets to have sex with who and whether you can have abortions or not.  But I am conservative when it comes to law and order and fiscal stuff.

[ukvalueinvestment]

I don't think many would argue that Giuliani did some fine things as mayor.  But that doesn't mean you can't also judge his actions over the last ten years in a negative way.  People change. Rudy has not aged well.

[Spekulatius]

I don't think many would argue that Giuliani did some fine things as mayor.  But that doesn't mean you can't also judge his actions over the last ten years in a negative way.  People change. Rudy has not aged well.

 

Yes, Rudy was well respected then but now has become a shadow of his former self. Blasio is simply not able to govern the city effectively in a time it really matters (like Rudy did around 9/11/2001).

 

I think there will be a big reset coming, one way or another.

[Guest cherzeca]

"I think there will be a big reset coming, one way or another."

 

walking down the NYC streets and seeing all of the stores boarding up their window fronts in advance of a potus election was a reset enough for me.

[BG2008]

I don't think many would argue that Giuliani did some fine things as mayor.  But that doesn't mean you can't also judge his actions over the last ten years in a negative way.  People change. Rudy has not aged well.

 

Yes, Rudy was well respected then but now has become a shadow of his former self. Blasio is simply not able to govern the city effectively in a time it really matters (like Rudy did around 9/11/2001).

 

I think there will be a big reset coming, one way or another.

 

Well, let's not forget how Big Mike got us through the GFC

[thepupil]

Because all the rich people left New York, EQR had to reach real far down to find renters making a meager $218K / year versus their typical $234K / year in order to get to 95% occupancy*.

 

*as of February across the company, NYC occupancy is at 90% as of 12/31/2020 but probably a few points higher now.

 

Q - Michael Bilerman {BIO 15926660 <GO>}

Maybe I'll jump in there. Mike, you mentioned kind of the customer coming back and right and particularly for Francisco and New York, are you see any changes approve [ph] those customers reorganizing order, maybe from an average age or demographics or income level how does it compare to your previous customer?

 

A - Michael L. Manelis {BIO 20043429 <GO>}

Yeah. So not a big change on the age front, but clearly, as we think about, we look at rent as a percent of income is kind of the gauge of affordability and we're underwriting residents when they come in based on gross rents not taking into account the concessions. You haven't seen a lot of changes in that front, which means that the average income of those coming is slightly lower than what it was pre-pandemic.

 

And I can use New York is a great example. So in New York for the first quarter, we have averaged our household incomes at $220,000 for the new applicants coming in. We used to run about 234, 235 on the average. So you could see that slight kind of reduction there and that's keeping that rent as a percent of income in line. It's running at 18.5% right now, which gives us the confidence that they will be able to kind of handle the rent increases as these markets continue to recover.

 

Q - Nick Joseph {BIO 16891718 <GO>}

Is there anything Michael that you find on that the-- where the people are coming from or they just in market moves i.e, basically trading up, perhaps in terms of quality of building, but trading perhaps down in rent? Just given how much rents have fallen, so is it in market moves, is it coming from out of market, are you able to identify where that person is coming from?

 

A - Michael L. Manelis {BIO 20043429 <GO>}

Yeah. So I mean, we have great transparency on both the ins and the outs of where people are going and where they're coming in. And I think, New York is I said that when I was opening to you the best example in the height of the pandemic. And the last call, we were talking about deals seekers. We saw 85% plus of every application coming to us from within that same MSA that's upgrading within the neighborhood, taking advantage of whatever price opportunity are changing their unit types.

 

Right now, what you've seen is that number is gradually starting to come down. So for the first quarter for February, we're at 72% in New York, normally we'd be at 65% pre-pandemic. So you're starting to see where they're coming from. I think we pointed out before, where did we see people going. Well, they were going to New Jersey, they were going to Connecticut and you're just now starting to see those suburban zip codes, starts to come back into like the Manhattan area.

[Gregmal]

 

 

Pretty staggering. Who wants to deal with this mess? Answer....probably not many, and fewer and fewer. Come to Miami and Dallas people and business, they actually want you.

 

[Spekulatius]

17 minutes ago, Gregmal said:

 

 

Pretty staggering. Who wants to deal with this mess? Answer....probably not many, and fewer and fewer. Come to Miami and Dallas people and business, they actually want you.

 

Lower the rates by 50% or whatever the clearing rate is and see what happens. They need to reboot this starting from a lower basis.

[Morgan]

6 hours ago, Gregmal said:

 

 

Pretty staggering. Who wants to deal with this mess? Answer....probably not many, and fewer and fewer. Come to Miami and Dallas people and business, they actually want you.

 

Looks like opportunity to me.
 

Within reason, I’ll buy almost any piece of property at the right price. Especially large collections like this. Buy it all, improve it and turn it around. 
 

If the current owners optimistically purchased these buildings at 2-3x what the rents will realistically support, they will have to pay for the mistake through long term vacancies or selling at a loss. Eventually they’ll be forced to be rational.  

[DooDiligence]

16 hours ago, Gregmal said:

 

 

Pretty staggering. Who wants to deal with this mess? Answer....probably not many, and fewer and fewer. Come to Miami and Dallas people and business, they actually want you.

The narrator calls all of that retail space, but I see entertainment.

Nightclubs & restaurants & coffee shops, maybe even a peep show or 2 just to keep it NY.

edit: It would be interesting to see a video revisit in a year or 2.

Edited May 24, 2021 by DooDiligence